Event: The company released its 2023 annual report and 24Q1 quarterly report:

1) 2023: Revenue of 4.01 billion yuan, +43.3% year on year; net profit to mother of 320 million yuan, +55.5% year on year; net profit without return to mother of 280 million yuan, +70.7% year on year. Gross profit margin 29.6%, -1.8pct year over year.

2) 23Q4: Revenue of 1.47 billion yuan, +44.5% year on month, +55.3% month on month; net profit to mother of 96 million yuan, +7.8% year on month, +25.7% month on month; net profit without return to mother of 83 million yuan, -3.1% year on year, +24.5% month on month. Gross margin 25.

4%, -5.8pct yoy, -6.2pct month-on-month.

3) 24Q1: Revenue of 860 million yuan, +21.9% YoY, -41.1% month-on-month; net profit to mother of 0.71 million yuan, -10.3% YoY, -26.3% month-on-month; net profit without return to mother of 50 million yuan, -29.1% YoY, -39.5% month-on-month. Gross margin 30.

4%, -3.9 pct year on year, +5.0 pct month-on-month.

Q1 revenue continued to grow, and profits declined somewhat due to cost growth: 24Q1's contract revenue maintained an upward trend, reaching 1,203 billion yuan, an increase of 26.9%, driving the company's upward revenue growth; at the same time, domestic market expansion efforts increased, and the share of domestic revenue increased, while the gross margin of overseas business was generally higher than domestic, leading to a decline in gross margin compared to the same period. Furthermore, the company adopted an active sales strategy to increase its market share and continuously strengthen the construction of domestic and foreign marketing networks, R&D capabilities, and operational capabilities, etc., which led to a significant increase in sales, management, R&D expenses, etc., which in turn affected the final profit performance.

Maintain growth confidence and strive to achieve 10 billion dollar contract revenue in 25 years: Based on comprehensive research and judgment on market trends and its own development, the company formulated a three-year (2023-2025) strategic development plan outline, and strives to achieve 8 billion yuan in 2024 and 10 billion yuan in 2025, highlighting confidence in development.

The penetration rate of high-end displays is increasing at an accelerated pace, and is expected to stimulate demand growth in the 24th Olympics: COB, MIP and other technologies gradually mature, driving the continuous expansion of application scenarios for high-end Mini/Micro LED displays. The company launched a total of 55 new products in 23, which strongly supports the growth of performance. With the Paris Olympics held in '24, the big year of sporting events is expected to drive an increase in demand for large screens such as commercial displays and advertisements. Overseas market share is concentrated on leaders such as Abison, and the company is expected to fully benefit.

Investment advice: According to the latest financial data, we have updated the profit forecast. The company's net profit for 2024-26 is estimated to be 48/6.7/860 million yuan (previously corresponding 2024-25 was 50/ 680 million yuan), corresponding PE is 10.6/7.7/6.0 times, maintaining the “buy” rating.

Risk warning: The development of new display technology falls short of expectations, sales of high-end products fall short of expectations, the development of energy storage business falls short of expectations, and the risk of untimely updates of research and usage information data.